System setup for non-controlling interest

Non-controlling interest (NCI) is the portion of equity ownership in a subsidiary not attributable to the parent company, who has a controlling interest and consolidates the subsidiary's financial results with its own. Longview calculates the NCI journal entry dynamically as data changes in the system. The Solutions Framework install configures most of the steps for this functionality, but there are additional manual steps for the event to function properly.

This section will provide information on the following topics:

• Updating the configuration file
• Adding NCI accounts
• Setting the adjustment entity for NCI
• Source non-controlling interest account
• Updating source and target non-controlling interests symbols for custom dimensions
• Inputting the ownership percentages

Updating the configuration file

Note: The instructions below assume configuration via server manager, but the settings can be configured directly in the lvsrvr.cfg file. The name of the parameter is given in brackets.

1. Start server manager.
2. Right-click on server and select Server Configuration.
3. Select Application.
   1. Check Journal Entries (USE_JOURNAL_ENTRIES).
4. Select OK.
5. Stop and start the server for the change to take effect.

Adding NCI accounts

The Solutions Framework install sets the target accounts to the default NCI accounts:

1. NCI target balance sheet account:
   • Attribute Name: AZNCITargetAccountBS.
   • Default Value: NCI_CY.
2. NCI target net income account:
   • Attribute Name: AZNCITargetAccountNI.
   • Default Value: NCI_NI.

The default setup will post a journal entry for the two default accounts.

To create a new NCI account:

1. It is possible (if required) to configure the NCI using one account per subsidiary, in which case the following steps are needed by subsidiary (e.g. subsidiary 727).
2. Start Application Administrator.
3. Navigate to Symbols->ACCOUNTS.
4. Locate the balance sheet NCI account, for example NCI_CY- NCI Current Year.
5. Right-click on the account and select New Symbol.
6. Enter the name of the account. For example, NCI_CY_727.
7. Enter the description. For example NCI Current Year 727.
8. Select Carry Forward for type.
9. Select Credit for the balance type.
10. Click the Parents tab.
11. Set the priority for the new symbol. For example, 100.
12. Click OK.
13. Locate the net income NCI account, for example NCI_NI- Non Controlling Interest.
14. Right-click on the account and select New Symbol.
15. Enter the name of the account. For example, NCI_NI_727.
16. Enter the description. For example, Non Controlling Interest 727.
17. Select Standard for type.
18. Select Credit for the balance type.
19. Click the Parents tab.
20. Set the priority for the new symbol. For example, 100.
21. Click OK.
22. Repeat steps 1-20 to create additional accounts for each subsidiary.
23. Select Actions->Maintenance to toggle maintenance mode to off.

Note: If a journal entry was already posted to NCI_CY, rename the symbol and create a new parent called NCI_CY.

To update the target accounts for a subsidiary:

Updating the target account attributes (AZNCITargetAccountBS and AZNCITargetAccountNI) is done through the Manage Entities App.

For more information, see Entities, Managing Entities.

Setting the adjustment entity for NCI

Each subsidiary must be related to an adjustment entity at the consolidation level. The calculated journal entry will be posted to this adjustment entity.

To update the target entity attribute:

Updating the target entity attributes (AZNCITargetEntity) is done through the Manage Entities App.

For more information, see Entities, Managing Entities.

Source non-controlling interest account

The source account used in the non-controlling interest calculation is defined by the following attribute:

• ASNCISourceAccount

  By default, this attribute is set to the Net Income (NI) account. This can be changed to a different account as required.

Updating source and target non-controlling interests symbols for custom dimensions

The Solutions Framework has 6 standard dimensions:

• ACCOUNTS
• TIMEPERIODS
• ENTITIES
• DATAVIEWS
• SCENARIOS
• CURRENCIES

If your Longview system has more than the 6 standard dimensions listed above, you will need to specify the non-controlling interests target symbols for each additional dimension. This is done through the following system attribute:

• ASNCID<Dimension>Target - <Dimension> NCI Target

  This attribute specifies the target symbol for each additional dimension in order to define the location of the target symbol to use to post the result of the calculation. By default, all additional dimensions target symbols will be set to <Dimension>_Total.

  For example, if you have an additional dimension called PRODUCTS, the Non-Controlling Interests target symbol attribute would be set to PRODUCTS_Total. This means that the calculated journal entries for non-controlling interests would be posted to the PRODUCTS_Total symbol. The attribute should only be set to a leaf symbol. If PRODUCTS_Total becomes a parent, the attribute value should be modified to a leaf product symbol.

Note: The non-controlling interests event expects the target symbol value in ASNCID<Dimension>Target to stay the same for any given fiscal year.

For the source symbols for all additional dimensions used to retrieve the net income amount (NI) needed for the calculation, the source cash flow attribute is used:

• ASCFD<Dimension>Source - <Dimension> Cash Flow Source

For more information, see System setup, source and target symbols .

Inputting the ownership percentages

The user needs to input ownership percentages for the event to work properly.

For more information see “Inputting intercompany investment data” in the Solutions User Guide.